The Grand Canyon Mall in Beijing
It was a busy week in China for Singapore’s government linked property companies, as both CapitaMalls Asia and Ascendas’ A-REIT announced real estate acquisitions totalling RMB 2.33 billion.
CapitaMalls Asia, which is part of the CapitaLand Group, announced on Monday that it had won a tender to acquire Grand Canyon Mall in Beijing, China, from Capital Airport Real Estate Group Co., Ltd for a reported RMB1.74 billion, although the deal is still subject to Chinese government approval.
After including acquisition-related expenses, the company expects its total investment in the 70,000 sqm mall project to be approximately RMB1.82 billion, or about RMB26,000 per square metre based on gross floor area.
The Grand Canyon Mall was completed in 2010 and is located along the South Third Ring West Road in Beijing’s Fengtai District. The mall is reported to currently be about 92.7% occupied, including such tenants as Carrefour, Poly Cinema, H&M, Gap, Sephora and Watsons.
Together with the malls belonging to CapitaRetail China Trust, Grand Canyon mall will be the 10th mall owned by the group in Beijing.
The CapitaLand group apparently foresees a number of ways to wring extra return from this investment, with reports noting that when the mall is divested by CapitaMalls Asia to CapitaRetail China Trust, CapitaMalls Asia will receive acquisition and fund management fees as the manager of the trust.
Also, some analysts believe the mall to be under-rented even at its high level of occupancy, with current rentals now providing a yield of 3.5 percent. However, existing rentals are estimated to be 35 to 90 percent below current market rates with around 47 percent of the leases due to expire between July 2013 and the end of 2015.
Although a listed company, CapitaLand belongs largely to DBS Bank, a government sponsored bankin Singapore.
On the same day that CapitaMalls made its deal in Beijing, A-REIT, a real estate investment trust managed by Ascendas announced that it was finalising the acquisition of a business park property in Shanghai for RMB 593.53 million.
Originally proposed on February 11th of this year, the A-REIT deal was for a 79,880 sqm (gross floor area) project in the Jinqiao area of Shanghai’s Pudong district previously owned by Hyday Holding Ltd, a Singapore-based subsidiary of Qingjian International (South Pacific) Group Development Co. Pte. Ltd. The project has a total site area of 31,952 sqm.
The property, which is to be renamed A-REIT City@Jinqiao, is located in the North section of the Jinqiao Economic and Technological Zone and is said to currently have three percent of the available space pre-committed by occupiers with around 20 percent of the total space under negotiation, according to a statement from A-REIT.
A-REIT is a Singapore-listed real estate investment trust (REIT) focussing on business park and industrial space. The trust has a portfolio of 102 properties in Singapore, comprising business and science park property, industrial property, and logistics space. A-REIT already owns two business park properties in China.
As of 31 March 2013, the trust’s total assets amounted to approximately S$7.0 billion. A-REIT is managed by Ascendas Funds Management (S) Limited (in its capacity as manager of A-REIT), a wholly owned subsidiary of the Singapore-based Ascendas Group.
The Ascendas Group belongs to a consortium which includes major government-linked investment companies including SembCorp and Temasek Holdings.
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